Wire Transfer

Wire transfer (also called bank transfer or credit transfer) is an electronic way of transferring money with the help of banks or special agencies that provide such services. There are two sides in the wire transfer. The first is sending, the second is receiving, the sending side must give detailed information about the receiving side, it includes account number, name and the amount of money to transfer. As it stated in the beginning the method is electronic, thus, it doesn’t require any cash exchange. Also wire transfer made transfers between domestic and international banks much easier.

How does a Wire Transfer works

Also, wire transfers may be known under another name, which is wire payments. The greatest advantages of wire transfers are speed and security. It also allows safe external transfers when two sides of the transaction are located in different parts of the Earth. Banks and companies that focus on dealing with financial transactions (or financial institutions) are a most common users of wire transfers, as for them such transfers are extremely convenient ways of exchanging money.

Instead of exchanging cash, banks give recipient’s information through wire transfers. Without this information a transaction can’t be initiated. The information includes personal information about the receiving side (name, contact number, address, etc.), banking information (branch number, account number), the bank’s information (bank identifier, name, address) and the transaction’s purpose.

As soon as the information is saved in the system, the wire payment may start. Now through a message the sending side is able to provide the receiving one with the detailed instruction of how to pay via a secure system (for example, SWIFT). After the receiving side gets the information, the recipient puts its own reserve funds on the said account. Only then the payment may be settled.

It turned out that wire transfers are a crucial instrument for those who are in search of a fast and secure way of sending money. Moreover, there are no geographical limits for such transfers, money can be sent in the most remote location. The limits, however, exist in the amount of money that can be sent, but these limits are high anyway.

Kinds of Wire Payments

Transfers can be within one particular country and between two different countries. The first type is called domestic and the second one is called international. Also, both types may be divided into smaller ones: inter-bank and intra-bank. Inter-bank means that transactions happen within the borders of one bank, intra-bank implies two different banks (or any other institutions).

Domestic wire Transfers. When two distinct banks of the same country exchange money it can be called a domestic wire transfer. As it was mentioned above, this transfer may be inter-bank and intra-bank. In order to carry out transactions the sending side can ask for a code or the branch number.

Usually these kinds of transactions don’t take much time, it may be processed in one day (often the day a transaction is initiated) or even in a couple of hours. The reason for that speed is that the transfer must go through only a domestic ACH (e.g. automated clearing house).

International wire transfers. This kind of transfer, as it’s clear from the name, requires the presence of a foreign country. The process of transferring is commenced in one country and money is sent to the other one. Despite the fact that the receiving side may have an account in the bank, where the process is initiated, the sending side still has to use international transfers.

In contrast to the domestic transfers, international ones take more than one day, usually it takes 2 business days. It’s longer for the reason it must clear a domestic ACH and similar system of the other country.

Wire Transfers related risks

Mainly if you utilize a legal way of wire transfers and the receiving side is known, there is nothing to be afraid of, since these kinds of transactions are quite safe.

In different countries there are some special agencies that help to monitor the purposes of transaction in order to prevent terrorist aiding, money laundering or sending money to the countries that are under sanctions. In case some of the described above happens agencies have rights to freeze an account and stop a transaction.